Stilinox International Pty Ltd v Rustica
[2002] VSC 137
•26 April 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 2114 of 2001
| STILINOX INTERNATIONAL PTY LTD (ACN 091 889 397) AND ANOTHER | Plaintiffs |
| v. | |
| SEBASTIANO RUSTICA AND OTHERS | Defendants |
---
JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 22 MARCH 2002 | |
DATE OF JUDGMENT: | 26 APRIL 2002 | |
CASE MAY BE CITED AS: | STILINOX INTERNATIONAL PTY LTD v RUSTICA | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 137 | |
---
CATCHWORDS: Security for Costs – Plaintiffs not providing financial information – Order made – Strike out application – Allegation of employment vague and confusing – Struck out – Allegation said to be clearly false – Matter for trial – Claims under Trade Practices Act 1974 – Need to plead causal link between contravention and loss.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P. Lacava SC and Mr J Castelan | Tisher Liner & Co. |
| For the Defendants | Mr M. Clarke | Tregardh Lawyers |
HIS HONOUR:
This is an application by the defendants to strike out certain paragraphs of the Amended Statement of Claim and for security for costs. I will deal with these separate applications in the reverse order to the argument before me.
Security for Costs
In my opinion, there is more than sufficient "credible testimony that there is reason to believe" that the plaintiffs will be unable to pay the costs of the defendants should such an order be made. (See s1335(1) of the Corporations Act 2001). While there were disputes about some matters, much of what follows was not in dispute.
The first plaintiff,. Stilinox International Pty Ltd, was registered on 7 March 2000. There are 550 issued shares. Mr Umberto (Bert) Tassoni was its sole director and secretary until 28 March 2001. Since that date, Mrs Patrizia Tassoni, the wife of Mr Tassoni, has been the sole director and secretary. The first plaintiff is not the registered proprietor of any real estate in the State of Victoria.
The second plaintiff, Stilinox Sales Pty Ltd, was registered on 25 May 1998. There are 12 issued shares. Mr Tassoni was the sole director and shareholder until 28 March 2001, when he was replaced by his wife. The second plaintiff is not the registered proprietor of any real estate in the State of Victoria.
In his affidavit sworn 14 March 2002, Mr Tassoni stated that the plaintiffs were part of the Stilinox group of companies, which originally comprised four companies. The other two companies were Stilinox Australia Pty Ltd ("Stilinox Australia") and Mondial Casa Pty Ltd ("Mondial Casa"). He said that Stilinox Australia was the main operating entity until January 2001. On 27 February 2001 a receiver and manager was appointed to that company, and on 4 April 2001 it was placed into liquidation. Mondial Casa was placed into liquidation on 20 June 2001.
Mr Tassoni blamed the liquidation of these companies on the National Australia Bank, which in January 2001 "abruptly withdrew its financial support leaving the cross-collateralised companies in an untenable position." That indicates to me that the financial position of Stilinox Australia and Mondial Casa was not strong.
Given this history, the defendants' solicitors not surprisingly gave consideration to the financial position of the plaintiffs, which have apparently taken over the operation of the Stilinox group's business. By a letter dated 23 January 2002, the defendants' solicitors wrote to the plaintiffs' solicitors seeking either evidence of the plaintiffs' ability to meet any costs order or an undertaking to provide security. The plaintiffs' solicitors replied by a letter dated 25 January 2002, in which they stated:
"We are instructed that the Plaintiffs are trading well and we advise that the Plaintiffs are prepared to allow you to inspect financial records including Bank statements and records prepared by our clients' internal and external accountants. However, we will require from you a Solicitor's Undertaking that such documents will not be shown or disclosed to your clients given that they contain valuable commercial information provided solely in response to your request for evidence in relation to the question of security for costs."
The offer of inspection was accepted but, according to the defendants' solicitor, Mr Andrew Tregardh, the only documents provided were the unaudited financial results for the second plaintiff for the six months ended 31 December 2001 (and budget forecasts to June 2002); bank statements from December 2001 and January 2002 with the name of the account holder unidentified; a one page profit and loss spreadsheet for the second plaintiff dated 1 February 2002 and two lever arch folders of purchase orders (the majority of which were in the name of the first plaintiff).
Further discussion ensued between the solicitors about whether or not this material was satisfactory. The plaintiffs' solicitors did indicate that each plaintiff was prepared to undertake to the Court to accept liability for any costs order made against the other plaintiff. However, they refused to provide any further information about the financial position of the plaintiffs.
In my opinion, the attitude of the plaintiffs was quite unsatisfactory. No explanation has been given why more financial information about both plaintiffs was not made available. I would have expected that, at least the financial statements for the year ended 30 June 2001 and the six months ended 31 December 2001 for the first plaintiff and for the years ended 30 June 1999, 2000 and 2001 for the second plaintiff would have been provided. The taxation returns for those years would also have given some indication of the profitability of the plaintiffs.
Even the information that was provided raised more questions than it answered. An accountant, Mr Angelo Mavrodis, swore an affidavit and produced an interim profit and loss account for the six months ended 31 December 2001 for the second plaintiff, plus a budget forecast for the next six months to 30 June 2002. Mr Mavrodis said that he was engaged by the second plaintiff in or around January 2002 to prepare those documents, which he did "on the basis of information and documentation supplied" to him by the second plaintiff "including copies of numerous sales contracts made for and on behalf of" the second plaintiff "over the preceding 2 years."
The "interim profit and loss account" of the second plaintiff for the six months ended 31 December 2001 showed an operating revenue of $1,922,491 and an operating profit of $275,959 (without allowing any amount for income tax). The balance sheet of the second plaintiff as at 31 December 2001 revealed total assets of $735,497 and total liabilities of $459,526. The shareholders' equity was therefore $275,971 consisting of share capital of $12 and retained profits of $275,959. The matching of the figure for retained profits with the figure for operating profit would suggest that the second plaintiff had only traded for the six month period, alternatively, if it had traded for longer, that it had done so without making either a profit or loss, or had paid out all of the profits by way of dividends.
According to Mr Tassoni, the second plaintiff had "entered into sales contracts with members of the public for various goods from the time that it was first established in May 1998" and that "each of the first three Defendants wrote over $2m worth of sales contracts in the name of" the second plaintiff. Thus, for the period from May 1998 to 30 June 2001, the second plaintiff's asset position had not improved, despite writing millions of dollars of sales. This does not encourage me to have any confidence that the retained profits of $275,959 as at 31 December 2001 will be available to meet any future costs order.
The projected figures for the six months to 30 June 2002 suggested that the operating profit would be $526,725, a 90% increase on the preceding six months, even though gross sales revenue was only projected to increase by 53%. In my opinion, projected figures are of virtually no weight in considering a security for costs application.
The situation is, therefore, that all I know about the plaintiffs is that they both have a very limited share capital, that they own no land in Victoria and that they now operate a business previously operated by two other companies in the group which both went into liquidation when their banker withdrew its support. Other than that, I know nothing about the first plaintiff because no financial statements, taxation returns or any other information was provided to the Court in opposition to the application for security for costs. The position is hardly better in respect of the second plaintiff. For the reasons already given I am not satisfied that its profit and loss statement for the six months ended 31 December 2001 establishes that it would be able to meet a costs order against it.
Mr Clarke of counsel, who appeared for the defendants, relied on a number of other matters in support of the application for security for costs, but I do not consider it necessary to go beyond the matters already discussed.
Mr Lacava SC, who appeared with Mr Castelan of counsel for the plaintiffs, submitted that the defendants had produced very little evidence that the plaintiffs would be unable to pay any costs order. He also submitted that the plaintiffs had co-operated fully in providing the information sought by the defendants. He criticised the defendants for not being satisfied with the plaintiffs' response. From the foregoing, it will be obvious that I do not agree with the submissions. Mr Lacava relied on the undertaking by each plaintiff to be responsible for any costs order made against the other plaintiff. In these circumstances, this does not assist the plaintiffs' case, in my opinion. Accordingly, I consider that it is appropriate that the plaintiffs provide security for costs.
The defendants sought an amount of $62,720.20 as the security for their costs up to and including the end of the first day of trial. This amount was based on the expert evidence of a legal costs consultant, Ms Elizabeth Harris. I indicated to counsel during argument that I considered the allowances by Ms Harris for a Request for Particulars of the Statement of Claim and for the provision of Further and Better Particulars of the Defence to be unnecessary. I also indicated that I considered the allowance for counsel's fees for 22 hours of conferences with witnesses prior to trial to be excessive when fees were also included for counsel to settle the witness statements. Mr Lacava submitted that the amount sought was "on the high side". Mr Clarke resisted any reduction, but he also pointed out that if parts of the Amended Statement of Claim were struck out and it was repleaded, there would have to be another Defence drawn and the cost of that step had not been allowed in Ms Harris' estimate.
In the circumstances, I consider that the amount of security that the plaintiffs should be ordered to give for the defendants' costs up to and including the end of the first day of trial is the sum of $56,000.
The strike out application
The defendants' summons dated 6 March 2002 sought the following order:
"Pursuant to Rule 23.01 and/or 23.02 the following paragraphs of the Amended Statement of Claim be struck out on the grounds that such paragraphs are an abuse of process or do not disclose a cause of action …"
The summons then divided the paragraphs in question into four separate groups.
Mr Lacava submitted that this language was consistent only with an application under Rule 23.02. He pointed out that nowhere in the summons did the defendants seek an order either staying the proceeding or giving judgment in the proceeding "generally or in relation to any claim", which was the language of Rule 23.01. This distinction was important because, pursuant to Rule 23.04(2), no evidence was admissible insofar as the application was brought under Rule 23.02, and a considerable number of affidavits had been filed in support of, and in opposition to, the application. Mr Lacava submitted that "insofar as [Mr Clarke] relies on Rule 23.02 he ought not be permitted to rely on the affidavit material."
Mr Clarke accepted that this was the correct approach to Rule 23.02. However, he submitted that, where appropriate, he was entitled to rely on either or both of Rule 23.01 and Rule 23.02, so long as the arguments were dealt with separately, in accordance with the requirements of each rule. He did not specifically deal with the omission from the summons of the form of relief appropriate to an application under Rule 23.01. This is a matter to consider further should it arise. I understood Mr Lacava to be content with this response.
The claim against Mr Motta
Mr Clarke first dealt with paragraph 1(b) of the defendants' summons which sought to strike out paragraphs 21, 22 and 24 of the Amended Statement of Claim. The paragraphs in question relate to the second defendant, Mr Sebastiano Motta. Mr Clarke stated that this part of the application was brought under both Rule 23.01 and Rule 23.02.
In paragraph 21, it is alleged that:
"By a deed made on or about 7 June 2000 between the Second Plaintiff and Motta … the Second Plaintiff agreed to retain Motta and Motta agreed to assist the Second Plaintiff as a Product Demonstrator."
Mr Clarke submitted that this paragraph contradicted paragraph 7(b) of the Amended Statement of Claim, in which it was alleged that Mr Motta was:
"from 7 June 2000 to 15 November 2000, a Product Demonstrator for companies or interests associated with the Plaintiffs."
Mr Clarke submitted that, contrary to Rule 13.09(2), there were inconsistent allegations of fact because either Mr Motta was employed by the second plaintiff, as alleged in paragraph 21, or he was employed by "companies or interests associated with the Plaintiffs", as alleged in paragraph 7(b). These allegations were not pleaded in the alternative (see Rule 13.09(1)).
In my opinion, the matter is not that simple. First, in paragraph 21 it is not necessarily alleged that Mr Motta was "employed" by the second plaintiff. The words used are "retain" and "assist". This could signify the relationship of independent contractor. It is relevant also to note the allegation in paragraph 7(c) that during the same period Mr Motta was:
"a person who executed contracts for the sale of goods on behalf of the Second Plaintiff, between the Second Plaintiff and its customers."
This sub-paragraph has not been pleaded to in the Defence.
Further, in paragraph 7(b) it is not necessarily alleged that Mr Motta was employed by "companies or interests associated with the Plaintiffs". It simply says that he was "a Product Demonstrator for companies or interests associated with the Plaintiffs". However, when one looks at paragraphs 22(a) and 23 of the Amended Statement of Claim, it is clear that the plaintiffs are alleging that Mr Motta was employed by "companies or interests associated with the Plaintiffs".
Nevertheless, for the reasons given, I am not convinced that there is the clear contradiction between paragraphs 7(b) and 21, as suggested by the defendants.
However, as I indicated during argument, it seems to me that the pleading is deficient in that it does not make clear just what it is said the relationship was between Mr Motta, on the one hand, and the second plaintiff and "companies and interests associated with the Plaintiffs" on the other. This is quite important because the plaintiffs are alleging that Mr Motta was employed by "companies or interests associated with the Plaintiffs" and that certain restrictions commenced to operate upon the termination of his employment "with companies or interests associated with the Plaintiffs.". How can one be employed by "interests"? And even if one could be, which companies or interests are alleged to have been the employer? How can one establish when the employment was terminated if the employer is not identified? Further, if Mr Motta was employed by one or more of the "companies or interests associated with the Plaintiffs", just what was his relationship with the second plaintiff? Was he also an employee of that company or was he an independent contractor? The answers to these questions cannot be found in the pleading as it currently stands.
Therefore, in my opinion, it is embarrassing for the defendant to have to plead to this allegations and it should be struck out (Rule 23.02(c)). It is not simply a matter for further particulars, as submitted by Mr Lacava. On the view I have reached, paragraphs 7(b) and 22 to 24 (and paragraph 25 as a consequence) of the Amended Statement of Claim all suffer from the same defect. I would be prepared to strike out all of those paragraphs, including paragraphs 7(b), 23 and 25 even though the latter were not included in the defendants' summons. This would leave paragraph 21 unaffected except that, on its own, it no longer discloses a cause of action and, therefore, it should also be struck out (Rule 23.02(a)). Accordingly, I will order that paragraphs 7(b) and 21 to 25 of the Amended Statement of Claim be struck out.
So far I have been dealing with this part of the application under Rule 23.02. However, as previously stated, the defendants also relied on Rule 23.01. Mr Clarke referred me to a number of exhibits which, he submitted, showed that any allegation that the second plaintiff, Stilinox Sales Pty Ltd, employed Mr Motta was false. Of particular interest was a letter from Stilinox Australia to Mr Motta dated 8 June 2000 confirming "the terms and conditions of your employment as product representative with Stilinox Australia Pty Ltd". The letter was signed by Mr Tassoni, the Chief Executive of Stilinox Australia. There was also an Employment Separation Certificate signed by Mr Tassoni on behalf of Stilinox Australia which stated that Mr Motta had worked for that company from 8 June to 15 November 2000. As stated previously, Stilinox Australia is now in liquidation. Finally, there was the Non Disclosure Non Compete Agreement itself ("the Motta Deed") which is the deed pleaded in paragraph 21 of the Amended Statement of Claim. The Motta deed is expressed to be an agreement between the second plaintiff and Mr Motta, who is described as "EMPLOYEE". The agreement is said to commence from 7 June 2000. It provides that "During the term of this Agreement and for a period of two (2) years after termination of same, EMPLOYEE, agrees …" certain matters by way of restrictions on him competing with the second plaintiff. It should be noted that, contrary to the pleading in paragraph 22(a), the wording of the Motta Deed was as set out in the preceding sentence and did not state "for a period of 24 months after the termination of employment with companies or interests associated with the Plaintiffs …"
In his affidavit sworn 14 March 2002, Mr Tassoni stated as follows:
"Given that … [Mr Motta was] entering into contracts on behalf of Stilinox Sales Pty Ltd and had access to exceedingly valuable commercial information in the form of sales contracts and customer details, I always required sales staff to execute non-disclosure agreements restraining sales people from, amongst other things, approaching customers of the Second Plaintiff for a period of 24 months after termination of employment."
He went on to say that Mr Motta executed such an agreement. In his affidavit in response sworn 20 March 2002, Mr Tassoni said that he did "not deny that Mr Motta was employed by Stilinox Australia Pty Ltd." He stated that Mr Motta "conducted trade and commerce on behalf of the Second Plaintiff with it's [sic] customers."
This material shows, in my opinion, that it is appropriate to strike out paragraphs 7(b) and 22 to 25. If so advised, the plaintiffs can replead those paragraphs to make it clear what Mr Motta's relationship with the second plaintiff was and can formulate a cause of action based on alleged breaches of the Motta Deed. I agree with Mr Lacava that the question of whether or not Mr Motta's signature on that document is a forgery is one that can only be resolved at trial.
The claim against Mr Brusco
Mr Clarke then dealt with paragraph 1(c) of the defendants' summons, which sought to strike out paragraphs 29, 30 and 32 of the Amended Statement of Claim. These paragraphs relate to the third defendant, Mr Maurizio Brusco.
This is a similar application to that concerning Mr Motta as the wording of the relevant paragraphs is the same, apart from the different names and what appears to be a typographical error in omitting the "s" from the word "Plaintiff" in paragraph 31. For the reasons already given, pursuant to Rule 23.02(c) and (a), I will order that paragraphs 8(b) and 29 to 33 of the Amended Statement of Claim be struck out.
Although the factual situation with Mr Brusco is more complicated, the same comments and reasons apply to the defendants' application under Rule 23.01 as were made in respect of the similar application concerning Mr Motta. If it is properly repleaded, a claim against Mr Brusco under the Non Disclosure Non Compete Agreement allegedly signed by him will have to be resolved at trial.
The claim against Mr Rustica
Mr Clarke's next submission concerned paragraph 1(a) of the defendants' summons, which sought to strike out paragraphs 9, 10, 16 and 17 of the Amended Statement of Claim. These paragraphs relate to the first defendant, Mr Sebastiano Rustica. Mr Clarke stated that this part of the application was brought only under Rule 23.01.
In paragraph 9, it is alleged that:
"9.By an agreement on 1 April 2001, Rustica was employed by the First Plaintiff as its Administration Manager ('the Rustica Employment Agreement').
PARTICULARS
The Rustica Employment Agreement is implied by reason of the conduct of the parties including, conduct over the period from 1 April 2001 to 8 June 2001 ('the Employment Period') as follows:
(i) Rustica acted as Administration Manager of the First Plaintiff;
(ii)Rustica had authority to act and did so act on behalf of the First Plaintiff;
(iii) the First Plaintiff paid Rustica a salary;
(iv) Rustica accepted payment of his salary from the First Plaintiff;
(v) all instructions to Rustica came from the First Plaintiff."
In his affidavit sworn 6 March 2002, Mr Rustica denied that he "was employed by the plaintiffs [sic] from April, 2001 to 8 June 2001." He stated that during this period he was employed by Mondial Casa, which is now in liquidation. He produced a copy of his group certificate for 2001 signed by Mr Tassoni which showed that he was employed by Mondial Casa from 15 January 2001 to 15 June 2001.
Mr Tassoni, in his first affidavit, said that even though the group certificate for 2001 listed Mondial Casa as Mr Rustica's employer, "this was in fact not the case." Mr Tassoni said that Mr Rustica was well aware that Mondial Casa "was not operational after April 2001". The Stilinox group of companies, he said, "were going through a considerable amount of chaos in early 2001." He referred to five cheques drawn by the first plaintiff made payable to Mr Rustica for salary and expenses. However, the first of these cheques was dated 29 May 2001, nearly two months after the employment agreement was allegedly made. Mr Tassoni also alleged that Mr Rustica:
"signed correspondence on behalf of the First Plaintiff during this period, and otherwise represented to other companies that he was the Operation Manager of the First Plaintiff."
However, only one of these documents was from Mr Rustica on the letterhead of the first plaintiff. The rest were communications to him at "Stilinox International" or simply "Stilinox", which is equivocal.
Mr Clarke submitted that the allegations in paragraphs 9, 10, 16 and 17 that Mr Rustica was employed by the first plaintiff from 1 April 2001 was "plainly false and known to be false by the plaintiffs, and are therefore an abuse of process." He referred me to the decision in Brailsford v Tobie[1]. However, Mr Tassoni has gone on oath to say that the group certificate is incorrect and that Mondial Casa "was not operational after April 2001." Whatever doubts one might have about this evidence, the fact is that it has been given, and given on oath. In the circumstances, it seems to me that Mr Lacava was correct in submitting that this is an issue that has to be resolved at trial.[2] Therefore, the allegations cannot be said, at this stage, to be an abuse of process and the application under Rule 23.01 fails.
[1](1889) 10 ALT 194
[2]See Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91 per Dixon J; General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 129 per Barwick CJ.
Nevertheless, I have difficulties with the way in which the allegation in paragraph 9 has been particularised. The alleged employment agreement is said to have been made on 1 April 2001. One would, therefore, normally expect that such an agreement would be wholly or partly in writing or oral. Yet, in the particulars the employment agreement is said to have been wholly implied by reason of the conduct of the parties, including conduct from 1 April 2001. In my opinion, in the repleaded Statement of Claim which will result from the orders I propose to make on the strike out application, proper particulars will have to be given of this employment agreement said to have been made on 1 April 2001. If they are not, the plaintiffs run the risk that this allegation will be struck out.
While I am dealing with the form of the pleading of the Amended Statement of Claim, I should also draw attention to the problems I have with paragraph 13. In my opinion, it is needlessly confusing to run together the terms of two separate agreements in the one paragraph. More importantly, the pleading of the terms of the Restraint Deed repeats an error similar to the one referred to in paragraph 30 above. On my reading of the Restraint Deed, there is no reference to "a period of 24 months after the termination of employment with the First Plaintiff" as pleaded in paragraph 13(a). Indeed, this would not make any sense because, as discussed above, the allegation is that Mr Rustica was only employed by the first plaintiff on 1 April 2001, and the Restraint Deed is said to have been executed on 4 February 1999.
Similarly, the pleading of the terms of the Further Restraint Deed refers to Mr Rustica's "employment with the First Plaintiff" in paragraph 13(c), (d) and (e). While the terms of the Further Restraint Deed are not the same as those of the Motta Deed, the same issue possibly arises whether the relationship created by the agreement is that of employee or independent contractor. The position is complicated by the fact that in this case the employer/principal contractor is said to be both plaintiffs and not just the second plaintiff. If the relationship is one of employer and employee then, again, despite the allegation that Mr Rustica was only employed by the first plaintiff on 1 April 2001, the Further Restraint Deed is said to have been executed on 27 January 2001. These problems will need to be addressed in the repleaded statement of claim.
The Trade Practices Act claims
Mr Clarke finally dealt with paragraph 1(d) of the defendants' summons which sought to strike out paragraphs 42 to 53 of the Amended Statement of Claim. These paragraphs plead breaches of the Trade Practices Act 1974 ("the TPA"). This part of the application was brought under Rule 23.02.
Mr Clarke's complaint was that the Amended Statement of Claim did not reveal any causal link between the alleged breaches of the TPA and loss and damage. In Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd[3] French J held that the statement of claim in that case did not plead:
"the necessary material facts to establish the causal relationship between contravention and loss which is necessary to the cause of action. In the case of misleading and deceptive statements said to constitute a contravention of s52 … facts and circumstances should be set out leading to a reasonable inference that the conduct and the damage stood to each other in the relation of cause and effect."[4]
[3](1987) 14 FCR 215
[4](1987) 14 FCR 215 at 222. See also Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR 41-591 at 44,154 per Goldberg J.
Mr Clarke submitted that there was no link between paragraphs 42 to 43A of the Amended Statement of Claim which dealt with the plaintiffs' alleged reputation in the use of what were called the Unique Functions and the Selling Methods, and paragraphs 47 and 50 which claimed that "by reason of the foregoing matters" the plaintiffs had suffered and were continuing to suffer loss and damage. This was particularly important in this case because, as mentioned previously, the budget forecast for the six months to 30 June 2002 for the second plaintiff showed a 90% increase in profits. All the more reason for the defendants to be told how it was put by the plaintiffs that the alleged loss had been caused by the contravention.
Mr. Clarke suggested that one way in which the deficiency could be overcome would be by pleading what the sales were before the defendants started operating and what the sales had subsequently dropped to. In addition, or alternatively, he submitted that the plaintiffs could identify the particular clients whose purchases had been lost. Whilst this is a relatively simple amendment, unless and until it is made, in my opinion, the pleading is defective because it does not contain the facts and circumstances which are said to constitute the causal link between contravention and loss.
Mr Lacava submitted that this part of the strike out application should not succeed. He rejected the assertion that the pleading of the trade practices claim was defective. In particular, he argued that damages for loss of business profits could be recovered under s82 of the TPA, including damages that are not capable of precise proof and calculation but which could be expected to result, and that such damages could be awarded even though a plaintiff did not produce evidence of particular losses from particular transactions.[5] In my opinion, this submission does not really meet the point that the causal link needs to be pleaded.
[5]See Prince Manufacturing Inc v Abac Corporation Australia Pty Ltd (1994) 4 FCR 288
Finally, Mr Lacava submitted that in the case where several causes of action might arise from the same matrix of facts, the Court should not strike out one cause of action simply because it might face serious legal difficulties and accordingly fail, when there was going to be a trial on the other causes of action.[6] Here, however, the striking out is sought not because the cause of action might fail but because it has not been properly pleaded.
[6]See Wickstead v Browne (1992) 30 NSWLR 1 per Kirby P at 5. His honour's dissenting approach was upheld on appeal by the High Court of Australia (Deane, Toohey and Gaudron JJ) 30 April 1993 – (1993) 10 Leg Rep SL2.
Accordingly, for the reasons discussed above, I am of the view that paragraphs 42 to 53 should be struck out (Rule 23.02(a)).
Conclusion
Subject to hearing from counsel the orders I would propose are:
1.The plaintiffs pay into Court the sum of $56,000 as security for the defendants' costs up to and including the end of the first day of trial or provide such other security for the said sum of $56,000 in a form acceptable to the Prothonotary by 4.00 p.m. on 10 May 2002 and until such payment is made or such other security is provided the proceeding be stayed.
2.Paragraphs 7(b), 8(b), 21 to 25, 29 to 33 and 42 to 53 of the Amended Statement of Claim be struck out.
3.The plaintiffs have leave to file and serve a Further Amended Statement of Claim by 4.00 p.m. on 24 May 2002.
4. The defendants file and serve a Defence by 4.00 p.m. on 7 June 2002.
5. The plaintiffs file and serve any Reply by 4.00 p.m. on 14 June 2002.
6.The parties file and serve Lists of Discoverable Documents by 4.00 p.m. on 5 July 2002
7. Inspection to be completed by 19 July 2002.
8.The further hearing of the summons for directions is adjourned to 2 August 2002.
9.The plaintiffs pay the defendants' costs thrown away by reason of the filing of the Further Amended Statement of Claim and the defendants' costs of and incidental to the defendants' summons filed 6 March 2002, including the costs reserved on 15 March 2002.
---
0